Regional tax reforms: Owner-occupied dwellings

The governments of the Flemish, Walloon and Brussels regions have presented their tax reforms, which provide inter alia for substantial changes to the tax reduction for owner occupied dwellings for loans concluded after 1 January 2016 (the competence for owner occupied dwellings became a regional matter as a result of the Sixth Constitutional Reform).

As a rule, taxpayers having mortgage loans concluded before 2016 keep the benefits of the existing regional tax relief for their dwelling(s).

Flemish region

In the Flemish region, in order to simplify the system, on the one hand, the condition of “sole” dwelling will be abolished enlarging the scope of the tax reduction for owner occupied dwellings to taxpayers having more than one dwelling. Taxpayers who concluded a loan for their own dwelling, but who already own another house or flat, which is used as a dwelling will be able to benefit from the tax reduction (at 40% or the marginal rates). However, in that case the increased amounts of EUR 760 and 80 EUR on top of the base amount of 1.520 EUR will not be available.

On the other hand, the Flemish tax relief for long-term savings (capital repayments) and the Flemish tax relief for ‘ordinary interest’ paid for the own dwelling will be abolished.

Brussels Region

As of 2017 the tax reduction (i.e. 2.290 EUR (base) + 760 EUR + 80 EUR at 45% or the marginal rates) will be abolished. Instead, when purchasing a dwelling in the Brussels Region, buyers will be entitled to a reduction of registration duties up to 22.500 EUR, subject to certain limitations.

Walloon Region

In the Walloon region a voucher system (“chèque habitat”) will be introduced instead of the current tax reduction (i.e. 2.290 EUR (base) + 760 EUR + 80 EUR at 40% or the marginal rates).

A tax reduction (50% from the 11th year) and a lump-sum tax benefit of 125 EUR per dependent child will be available for maximum 20 years. The voucher is not linked to a specific dwelling.

The amount of the reduction will depend on the net taxable income of the taxpayer. The maximum amount will be capped at 1.520 EUR per year for taxpayers having a net taxable income of up to 21.000 EUR. If the taxable income exceeds 21.000 EUR per year, the tax benefit will be reduced gradually. Taxpayers with a taxable income of more than 81.000 EUR per year will not be entitled to the reduction.

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